Exception to Caveat Emptor

Introduction:             The exception to the rule of caveat emptor have become more important than the rule itself.  The rule originated in the time when nearly all sales took place in the open market.  The buyer and seller came face to face, the seller exhibited his goods, the buyer examine them, brought them if he liked.  But as trade and commerce acquire global dimensions, it became difficult for buyer to examine goods before purchase.  Most of the transactions of sale and purchase are now days entered into by correspondence.  In such circumstances it is for the seller to assure the quantity and quality of the goods.  Therefore it became necessary to protect buyer and to restrict the rule of caveat emptor, which are as under-

The Exception of caveat emptor:

1. Fitness for buyer's purpose: Section 16(1) said that the buyer, expressly or by implication, makes known to the seller the particular purpose for which he requires the goods and relies on the seller's skill or judgment and the goods are of a description which it is in the course of the seller's business to supply, the seller must supply the goods which shall be fit for the buyer's purpose.
2. Sale under a patent or trade name: Section 16(1) Proviso says that in this case of a contract for the sale of a specific article under its patent or other trade name, there is no implied condition that the goods shall be reasonable fit for any particular purpose.
3. Merchantable Quality:             Section 16(2) said that where goods brought by description from a seller who deals in goods of that description, whether he is the manufacturer or producer or not, there is an implied condition that the goods shall be of merchantable quality But if the buyer has examined the goods, there is no implied condition as regards defects, which such examination ought to have revealed.
4. Usage of trade:                        Section 16(3) said that an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
5. Consent by fraud: Where the seller obtains of the buyer in a contract of sale, by fraud or where the seller knowingly conceals a defect which could not be discovered on a reasonable examination i.e. where there is a latent defect in the goods, the doctrine of caveat emptor does not apply.

Case Law:

1. Ranbirsing Shankarsing Thakur Vs. Hindustan General Electric Corporation Ltd.[1] :

In this case Bombay High Court has discussed in detail the exceptions to the rule caveat emptor.  Court held that to Section 16(1) of the Sale of Goods Act 1930 applies where the buyers requires goods for a particular purpose, where the buyer expressly or by implication makes known to the seller's usual course of business is to sell such goods whether he is the actual producer or not.  Where all these essential facts exist there is an implied condition that the goods shall be reasonably fit for such purpose.  The seller's liability to supply such goods is an absolute one.

1. Frost Vs. Aylesbury Dairy Co. Ltd.[2]:

Bench held that when F brought milk from A. the milk contained germs of typhoid fever, X's wife took the milk and got infection as a result of which she dies.  Plaintiff was entitled to recover damages.

[1] AIR, 1971, Bom. 97

[2] 1905.